The accusations are serious: “The profits of the main European leasing companies grew by 59% from 2018 to 2022, despite the size of their fleets increasing by only 5%”. And then again: “Leasing companies, also in marketing activities, claim their primacy in the transition and declare themselves to be at the forefront of reducing road transport emissions; for now, however, few facts correspond to communication strategies. European leasing records an adoption rate of electric cars of 10.4%, compared to 10.5% in the remaining market”. This is the attack of the new report by Transport & Environment, the independent European environmental organization after analyzing the profitability of the seven largest European leasing companies (ALD | LeasePlan, Alphabet/BMW Financial Services, Arval, Leasys, Mercedes-Benz Mobility/ Athlon, Mobilize Financial Services and Volkswagen Financial Services).
The question is this: given that rental companies are giants (in 2022 they reached a total value of 15.7 billion euros) and have the financial capacity to accelerate the transition towards electric cars, why do they do nothing despite having in your hands, annually, around 50% of the cars sold in Europe?
The answer is simple and we could summarize it to the extreme as follows: rental companies are not stupid. And they have conquered half of the market because they follow customer requests and do not impose anything on anyone. A concept that is not very clear to Transport & Environment given that they then state: “The automotive market also depends on their orientations, but, unlike the European car manufacturers which in most cases have objectives of electrification of 100% of their fleets as early as 2030, none of the companies covered by this study have announced a phase out date for polluting vehicles”.
It’s true that long-term rental is the ideal solution for electric cars but it’s absurd to argue that thanks to the fact that rental companies make tons of money they have to sacrifice their turnover to encourage the green transition.
It sounds like Checco Zalone’s famous gag when he gives a lift to the Emos and explains to them “you don’t cut yourself because you suffer but you suffer because you cut yourself. Try not to cut yourself anymore and you will see that you will no longer suffer”: rental companies make money precisely for what T&E research disputes.
It is no coincidence that the study just presented focuses precisely on the economic accounts: “The two leasing companies that have recorded the greatest growth in profits since 2018 – explains the dossier – are Arval (owned by Bnp Paribas) and Leasys (the leasing branch of Crédit Agricole and Stellantis). Arval’s profits have grown 192% since 2018, even though the number of leased and financed vehicles has only increased 33%. The size of Leasys’ fleet, however, has increased significantly (82%), and its profits have almost doubled (+143%)”. Not only that, the report also examines the Return on Equity (ROE) of these companies, the benchmark used by investors to determine the financial health of a company. A company is considered “healthy” when the ROE is above 10%. The ROE of leasing companies increased from an already high 21.2% in 2018 to 27.2% in 2022. For comparison, banks – owners of leasing companies and similar sector – record a ROE between 7 and 12%. In short, they make tons of money. But they do it because they are good, because they follow the market and because – being private companies – they obviously follow profit. However, Elena Lake, Electric Fleets National Lead of T&E Italia, explains: “Billions in profits, yet so few electric vehicles on the road. This discrepancy between the profitability of major leasing companies and their lack of progress on electric mobility is serious. The financial results would allow these companies to invest convincingly in the transition: but between environmental and climate responsibility and short-term profits, to date they seem to favor only the latter”.
Of course, the financial results would allow many things to be done. But in a private company, if a manager doesn’t do things that increase turnover, he is fired immediately. “Some people – said Winston Churchill – see a private company as a ferocious tiger to be killed immediately, others as a cow to be milked, very few see it as it really is: a robust horse pulling a very heavy cart”.
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